Ah, the illustrious Jeffrey Gundlach, the so-called ‘Bond King,’ has graced us with his wisdom once more. He warns, with the gravitas of a man who has just discovered his favorite tea is out of stock, that investors clutching a staggering $25 trillion in US assets might soon decide to take their money and run—overseas, that is.
In a recent tête-à-tête with Bloomberg, Gundlach expressed his bewilderment at the stock market’s antics, the dollar’s peculiar behavior, and the Treasury market’s oddities. “Strange,” he mused, as if he were observing a cat trying to swim. It seems the investors are getting a whiff of something foul—perhaps the scent of unsustainable fiscal policies wafting from the US government.
“In the last 15 years, we’ve seen the S&P 500 take a tumble more times than a clumsy waiter. Each time, when the S&P dips over 10%, the trade-weighted dollar index usually perks up like a dog spotting a squirrel. But this time? The dollar decided to join the S&P in its downward spiral. Curious, isn’t it?”
“Typically, when the Fed cuts interest rates, the yield curve behaves like a well-trained dog, obediently following suit. But lo and behold, the 10-year Treasury yield decided to rebel, rising instead. It’s as if the financial world has taken a turn for the absurd.”
“What we’re witnessing is a realization that the interest expenses for the United States are about as sustainable as a chocolate teapot. With a $2.1 trillion budget deficit and interest rates that refuse to budge, we’re in a pickle.”
Gundlach, with the precision of a surgeon, zeroes in on foreign investors, who hold a treasure trove of US assets. He suggests that it’s not just a whimsical thought that these investors might start packing their bags and heading for greener pastures.
“Once upon a time, foreigners were investing more in the US than we were abroad, to the tune of $3 trillion. Fast forward to today, and that figure has ballooned to over $25 trillion. With the dollar on a slippery slope, it’s not far-fetched to think some of that cash could make a swift exit.”
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2025-06-15 10:22